CONSOLIDATED HIGHLIGHTS
FINANCIAL REVIEW
($000s except percentages and per share amounts) | Three months ended | Nine months ended | ||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Consolidated revenue | $ | 255,235 | $ | 245,085 | $ | 750,676 | $ | 737,624 | ||||
Net income | $ | 20,734 | $ | 30,852 | $ | 55,663 | $ | 78,089 | ||||
Per share-basic | $ | 0.29 | $ | 0.45 | $ | 0.77 | $ | 1.14 | ||||
Per share-diluted | $ | 0.28 | $ | 0.43 | $ | 0.74 | $ | 1.09 | ||||
Adjusted EBITDA(1) | $ | 52,286 | $ | 58,050 | $ | 145,142 | $ | 150,290 | ||||
Adjusted EBITDA %(1) | 21% | 24% | 19% | 20% | ||||||||
Free Cash Flow(1) | 37,121 | 40,076 | 87,269 | 89,416 |
(1) Adjusted EBITDA and Free Cash Flow are non-IFRS financial measures, Adjusted EBITDA % is a non-IFRS financial ratio. These metrics are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios.
OPERATIONAL REVIEW
($000s except days, proppant, pumped, horsepower and units) | Three months ended | Nine months ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Fracturing services | ||||||||
Fracturing operating days(2) | 407 | 444 | 1,273 | 1,566 | ||||
Proppant pumped (tonnes) | 589,000 | 478,000 | 1,693,000 | 1,776,000 | ||||
Fracturing crews | 8 | 8 | 8 | 8 | ||||
Dual fuel horsepower (“HP”), ended | 205,250 | 182,750 | 205,250 | 182,750 | ||||
Total HP, ended | 478,750 | 490,000 | 478,750 | 490,000 | ||||
Coiled tubing services | ||||||||
Coiled tubing operating days(2) | 1,311 | 1,199 | 3,713 | 3,187 | ||||
Active coiled tubing units, ended | 21 | 19 | 21 | 19 | ||||
Total coiled tubing units, ended | 35 | 33 | 35 | 33 |
(2) An operating day is defined as any coiled tubing or fracturing work that is performed in a 24-hour period, exclusive of support equipment.
($000s except shares) | |||||
2023 | 2022 | ||||
Cash and cash equivalents | $ | 1,486 | $ | 2,785 | |
Working Capital (including cash and cash equivalents)(1) | $ | 72,443 | $ | 66,580 | |
Total assets | $ | 670,249 | $ | 682,532 | |
Total long-term financial liabilities(1) | $ | 124,673 | $ | 168,746 | |
Net Debt(1) | $ | 89,750 | $ | 142,224 | |
Shares outstanding | 72,233,064 | 71,589,626 |
(1) Working Capital, Total long-term financial liabilities and Net Debt are non-IFRS financial measures. They are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios.
THIRD QUARTER 2023 HIGHLIGHTS
- Consolidated revenue for the three months ended
September 30, 2023 of$255.2 million , increased 4% from$245.1 million for the three months endedSeptember 30, 2022 and increased 10% from$232.1 million for the three months endedJune 30, 2023 . - Net income for the three months ended
September 30, 2023 was$20.7 million ($0.28 per diluted share) compared to$30.9 million ($0.43 per diluted share) in the same period of 2022 and$15.3 million ($0.21 per diluted share) for the three months endedJune 30, 2023 . - For the three months ended
September 30, 2023 , Adjusted EBITDA was$52.3 million or 21% of revenue compared to$58.1 million or 24% of revenue in Q3 2022 and$47.4 million or 20% of revenue in Q2 2023. - Free Cash Flow for the three months ended
September 30, 2023 was$37.1 million compared to$40.1 million in Q3 2022 and$34.8 million in Q2 2023. - STEP made significant progress on debt reduction during the quarter, achieving its year end goal of reducing net debt to less than
$100 million one quarter early, while continuing investment into the long-term sustainability of the business.- The Company had Net Debt of
$89.8 million atSeptember 30, 2023 , compared to$142.2 million atDecember 31, 2022 . STEP has reduced Net Debt by nearly$230 million from peak levels in 2018. - The Company invested
$25.2 million into sustaining and optimization capital equipment in the quarter. The Company completed conversion of nine Tier 4 direct injection dual-fuel pumps in theU.S. and had sixteen Tier 4 dual-fuel units in the field inCanada at the end of Q3, providing diesel substitution rates of up to 85%.
- The Company had Net Debt of
THIRD QUARTER 2023 OVERVIEW
The third quarter of 2023 continued the trend of positive financial results since the first quarter of 2022. Revenue of
Commodity prices stabilized in the third quarter after a volatile second quarter. West Texas Intermediate (WTI), the benchmark
STEP’s Canadian fracturing service line had another solid quarter, despite residual impacts from wildfires and floods in Q2 that delayed operations to start the third quarter. The Canadian fracturing service line generated
Net income was
Free Cash Flow was
______________________________
1 Baker Hughes North American Rotary Rig Count,
MARKET OUTLOOK
Oil prices are expected to remain volatile in the near term, as recessionary concerns over the macro economic outlook are being overshadowed by geopolitical events in
Near term natural gas prices are expected to rise with the seasonal demand for winter heating in both
The long-term outlook for 2025 and onward for oilfield services is very constructive. The recent
Creating a North American regulatory framework to unleash the power of clean, safe and secure energy, particularly LNG, will immediately lower emissions and improve living standards across the world, while continuing to advance global climate goals. STEP is proud to be part of an energy industry in
As with most years, Canadian Q4 activity levels are expected to show a sequential decline as client budget exhaustion and seasonal holiday activity begins to slow activity in the basin. Despite stronger commodity prices, producers are not expected to materially add to their 2023 budgets, preferring instead to maintain tight capital discipline to support shareholder return frameworks. Fracturing job mix is expected to see a higher mix of smaller jobs, resulting in less efficient activity levels through the quarter. Coiled tubing activity is anticipated to remain steady until the seasonal slowdown begins in early to mid-December.
STEP will use the moderating of activity in Q4 2023 to complete more intensive maintenance on equipment to prepare it for the extremely intensive utilization anticipated for Q1 2024. STEP also has the flexibility to redeploy professionals from operating fracturing equipment to operating sand transport trucks, reducing the payroll burden during slower periods while also reducing logistics costs. STEP has one of western Canada’s largest sand hauling fleets, a critical advantage in the basin that is often tight for sand hauling capacity.
Activity in 2024 is expected to increase, with multiple clients signalling that their 2024 capital budgets will be higher than 2023. The discipline in global oil markets and anticipated completion of the
The first quarter fracturing schedule is almost fully booked, supported by an expected incremental year over year increase in work scope following the award of a two-year fracturing service and ancillary services agreement from a leading
Demand for coiled tubing is expected to grow in 2024. Since inception, STEP pursued a differentiation strategy of bringing the most technically capable equipment and crews to client locations. STEP’s equipment is purpose built for the deepest, most technically challenging wells found in the
STEP’s 12 coiled tubing units are anticipated to remain highly utilized for much of the quarter, although the holiday season is likely to affect efficiencies in November and December. STEP’s performance in the northern basins continues to outpace many of the existing competitors that are unable to bring the technology and equipment that comes with the STEP service offering. The consolidation in the premium coiled tubing market has been supportive for pricing in these regions, maintaining rates at more consistent levels. As the Permian and
Sustained oil prices in the
Consolidated
STEP’s focus for the balance of 2023 and into 2024 is on the generation of Free Cash Flow while continuing to invest in emission reducing technologies on our asset base, including the recently deployed Tier 4 dual fuel engines in our Canadian and
CANADIAN FINANCIAL AND OPERATIONS REVIEW
STEP has a fleet of 16 coiled tubing units in the WCSB, all of which are designed to service the deepest wells in the basin. STEP’s fracturing business primarily focuses on the deeper, more technically challenging plays in
($000’s except per day, days, units, proppant pumped and HP) | Three months ended | Nine months ended | ||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Revenue: | ||||||||||||
Fracturing | $ | 127,415 | $ | 110,991 | $ | 378,784 | $ | 370,518 | ||||
Coiled tubing | 30,241 | 30,100 | 89,224 | 82,494 | ||||||||
157,656 | 141,091 | 468,008 | 453,012 | |||||||||
Expenses | 125,414 | 112,213 | 375,512 | 374,536 | ||||||||
Results from operating activities | $ | 32,242 | $ | 28,878 | $ | 92,496 | $ | 78,476 | ||||
Adjusted EBITDA(1) | $ | 41,235 | $ | 40,895 | $ | 119,401 | $ | 112,473 | ||||
Adjusted EBITDA %(1) | 26% | 29% | 26% | 25% | ||||||||
Sales mix (% of segment revenue) | ||||||||||||
Fracturing | 81% | 79% | 81% | 82% | ||||||||
Coiled tubing | 19% | 21% | 19% | 18% | ||||||||
Fracturing services | ||||||||||||
Number of fracturing operating days(2) | 250 | 271 | 771 | 945 | ||||||||
Proppant pumped (tonnes) | 308,000 | 234,000 | 914,000 | 915,000 | ||||||||
Stages completed | 3,268 | 4,006 | 10,165 | 11,881 | ||||||||
Fracturing crews | 5 | 5 | 5 | 5 | ||||||||
Coiled tubing services | ||||||||||||
Number of coiled tubing operating days(2) | 448 | 536 | 1,368 | 1,468 | ||||||||
Active coiled tubing units, end of period | 9 | 8 | 9 | 8 | ||||||||
Total coiled tubing units, end of period | 16 | 16 | 16 | 16 |
(1) Adjusted EBITDA is a non-IFRS financial measure and Adjusted EBITDA % are non-IFRS financial ratios. They are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios.
(2) An operating day is defined as any coiled tubing or fracturing work that is performed in a 24-hour period, exclusive of support equipment.
THIRD QUARTER 2023 COMPARED TO THIRD QUARTER 2022
Revenue for the three months ended
Adjusted EBITDA for the third quarter of 2023 was
NINE MONTHS ENDED
Revenue for the nine months ended
The Company’s Canadian operating expenses were relatively flat as cost management remains a focus. Despite these efforts, the higher inflationary environment combined with continued supply chain disruptions, commodity price appreciation, and strong industry activity has costs escalating across most expense categories.
Canadian operations generated Adjusted EBITDA of
STEP has a fleet of 19 coiled tubing units in the Permian and
($000’s except per day, days, units, proppant pumped and HP) | Three months ended | Nine months ended | ||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Revenue: | ||||||||||||
Fracturing | $ | 47,579 | $ | 67,794 | $ | 145,544 | $ | 199,035 | ||||
Coiled tubing | 50,000 | 36,200 | 137,124 | 85,577 | ||||||||
97,579 | 103,994 | 282,668 | 284,612 | |||||||||
Expenses | 94,464 | 91,034 | 280,819 | 265,788 | ||||||||
Results from operating activities | $ | 3,115 | $ | 12,960 | $ | 1,849 | $ | 18,824 | ||||
Adjusted EBITDA(1) | $ | 15,356 | $ | 20,814 | $ | 38,504 | $ | 50,958 | ||||
Adjusted EBITDA %(1) | 16% | 20% | 14% | 18% | ||||||||
Sales mix (% of segment revenue) | ||||||||||||
Fracturing | 49% | 65% | 51% | 70% | ||||||||
Coiled tubing | 51% | 35% | 49% | 30% | ||||||||
Fracturing services | ||||||||||||
Number of fracturing operating days(2) | 157 | 173 | 502 | 621 | ||||||||
Proppant pumped (tonnes) | 281,000 | 244,000 | 779,000 | 861,000 | ||||||||
Stages completed | 1,328 | 1,121 | 3,767 | 3,678 | ||||||||
Fracturing crews | 3 | 3 | 3 | 3 | ||||||||
Coiled tubing services | ||||||||||||
Number of coiled tubing operating days(2) | 863 | 663 | 2,345 | 1,719 | ||||||||
Active coiled tubing units, end of period | 12 | 11 | 12 | 11 | ||||||||
Total coiled tubing units, end of period | 19 | 17 | 19 | 17 |
(1) Adjusted EBITDA is a non-IFRS financial measure and Adjusted EBITDA % is non-IFRS financial ratios. They are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios.
(2) An operating day is defined as any coiled tubing or fracturing work that is performed in a 24-hour period, exclusive of support equipment.
THIRD QUARTER 2023 COMPARED TO THIRD QUARTER 2022
Revenue for the three months ended
NINE MONTHS ENDED
Revenue for the nine months ended
The year over year increase in operating expenses reflects increased maintenance costs from the increase in fracturing intensity compared to the prior year and from the intensive preventative maintenance program completed during the first quarter of 2023. Inflationary pressures and supply chain constraints have eased slightly during Q3 2023, but costs remain higher on a year over year basis across most expense categories.
CORPORATE FINANCIAL REVIEW
The Company’s corporate activities are separated from Canadian and
($000’s) | Three months ended | Nine months ended | ||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Expenses: | ||||||||||||
Operating expenses | $ | 490 | $ | 503 | $ | 1,438 | $ | 1,869 | ||||
Selling, general and administrative | 7,259 | 4,027 | 10,656 | 24,577 | ||||||||
Results from operating activities | $ | (7,749 | ) | $ | (4,530 | ) | $ | (12,094 | ) | $ | (26,446 | ) |
Add: | ||||||||||||
Depreciation | 222 | 151 | 637 | 437 | ||||||||
Share-based compensation expense (recovery) | 3,322 | 720 | (1,306 | ) | 12,868 | |||||||
Adjusted EBITDA(1) | $ | (4,205 | ) | $ | (3,659 | ) | $ | (12,763 | ) | $ | (13,141 | ) |
Adjusted EBITDA %(1) | (2% | ) | (1% | ) | (2% | ) | (2% | ) |
(1) Adjusted EBITDA is a non-IFRS financial measure and Adjusted EBITDA % is a non-IFRS financial ratio. They are not defined and have no standardized meaning under IFRS. See Non-IFRS Measures and Ratios.
THIRD QUARTER 2023 COMPARED TO THIRD QUARTER 2022
For the three months ended
NINE MONTHS ENDED
For the nine months ended
NON-IFRS MEASURES AND RATIOS
This Press Release includes terms and performance measures commonly used in the oilfield services industry that are not defined under IFRS. The terms presented are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-IFRS measures have no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The non-IFRS measures should be read in conjunction with the Company’s quarterly financial statements and Annual Financial Statements and the accompanying notes thereto.
“Adjusted EBITDA” is a financial measure not presented in accordance with IFRS and is equal to net (loss) income before finance costs, depreciation and amortization, (gain) loss on disposal of property and equipment, current and deferred income tax provisions and recoveries, equity and cash settled share-based compensation, transaction costs, foreign exchange forward contract (gain) loss, foreign exchange (gain) loss, and impairment losses. “Adjusted EBITDA %” is a non-IFRS ratio and is calculated as Adjusted EBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA % are presented because they are widely used by the investment community as they provide an indication of the results generated by the Company’s normal course business activities prior to considering how the activities are financed and the results are taxed. The Company uses Adjusted EBITDA and Adjusted EBITDA % internally to evaluate operating and segment performance, because management believes they provide better comparability between periods. The following table presents a reconciliation of the non-IFRS financial measure of Adjusted EBITDA to the IFRS financial measure of net income.
($000s except percentages) | Three months ended | Nine months ended | |||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Net income | $ | 20,734 | $ | 30,852 | $ | 55,663 | $ | 78,089 | |||||
Add (deduct): | |||||||||||||
Depreciation and amortization | 20,743 | 19,378 | 62,614 | 63,140 | |||||||||
Gain on disposal of equipment | (417 | ) | (921 | ) | (1,064 | ) | (2,571 | ) | |||||
Finance costs | 2,850 | 1,330 | 8,557 | 7,551 | |||||||||
Income tax expense | 6,936 | 6,211 | 18,318 | 20,582 | |||||||||
Share-based compensation – Cash settled | 2,709 | 396 | (3,713 | ) | 14,441 | ||||||||
Share-based compensation – Equity settled | 1,336 | 977 | 4,020 | 1,990 | |||||||||
Foreign exchange (gain) loss | 1,278 | (173 | ) | 2,036 | (224 | ) | |||||||
Unrealized gain on derivatives | (3,783 | ) | - | (1,289 | ) | - | |||||||
Impairment reversal | - | - | - | (32,708 | ) | ||||||||
Adjusted EBITDA | $ | 52,386 | $ | 58,050 | $ | 145,142 | $ | 150,290 | |||||
Adjusted EBITDA % | 21% | 24% | 19% | 20% |
“Free Cash Flow” is a financial measure not presented in accordance with IFRS and is equal to net cash provided by operating activities adjusted for changes in non-cash Working Capital from operating activities, sustaining capital expenditures, term loan principal repayments and lease payments (net of sublease receipts). The Company may deduct or include additional items in its calculation of Free Cash Flow that are unusual, non-recurring or non-operating in nature. Free Cash Flow is presented as this measure is widely used in the investment community as an indication of the level of cash flow generated by ongoing operations. Management uses Free Cash Flow to evaluate the adequacy of internally generated cash flows to manage debt levels, invest in the growth of the business or return capital to shareholders. The following table presents a reconciliation of the non-IFRS financial measure of Free Cash Flow to the IFRS financial measure of net cash provided by operating activities.
($000s) | Three months ended | Nine months ended | ||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Net cash provided by (used in) operating activities | $ | 50,736 | $ | 73,048 | $ | 131,876 | $ | 90,265 | ||||
Add (deduct): | ||||||||||||
Changes in non-cash working capital from operating activities | (2,607 | ) | (19,395 | ) | (8,319 | ) | 50,246 | |||||
Sustaining capital | (8,518 | ) | (11,107 | ) | (30,139 | ) | (30,531 | ) | ||||
Term loan principal repayments | - | - | - | (13,975 | ) | |||||||
Lease payments (net of sublease receipts) | (2,490 | ) | (2,470 | ) | (6,149 | ) | (6,589 | ) | ||||
Free Cash Flow | $ | 37,121 | $ | 40,076 | $ | 87,269 | $ | 89,416 |
“Working Capital”, “Total long-term financial liabilities” and “Net Debt” are financial measures not presented in accordance with IFRS. “Working Capital” is equal to total current assets less total current liabilities. “Total long-term financial liabilities” is comprised of loans and borrowings, long-term lease obligations and other liabilities. “Net Debt” is equal to loans and borrowings before deferred financing charges less cash and cash equivalents and CCS derivatives. The data presented is intended to provide additional information about items on the statement of financial position and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS.
The following table represents the composition of the non-IFRS financial measure of Working Capital (including cash and cash equivalents).
($000s) | |||||||
2023 | 2022 | ||||||
Current assets | $ | 233,899 | $ | 256,361 | |||
Current liabilities | (161,456 | ) | (189,781 | ) | |||
Working Capital (including cash and cash equivalents) | $ | 72,443 | $ | 66,580 | |||
The following table presents the composition of the non-IFRS financial measure of Total long-term financial liabilities.
($000s) | |||||
2023 | 2022 | ||||
Long-term loans | $ | 89,740 | $ | 140,794 | |
Long-term leases | 18,461 | 13,860 | |||
Other long-term liabilities | 16,472 | 14,092 | |||
Total long-term financial liabilities | $ | 124,673 | $ | 168,746 |
The following table presents the composition of the non-IFRS financial measure of Net Debt.
($000s) | |||||||
2023 | 2022 | ||||||
Loans and borrowings | $ | 89,740 | $ | 140,794 | |||
Add back: Deferred financing costs | 1,909 | 2,704 | |||||
Less: Cash and cash equivalents | (1,486 | ) | (2,785 | ) | |||
Less: CCS Derivatives liability (asset) | (413 | ) | 1,511 | ||||
Net Debt | $ | 89,750 | $ | 142,224 |
RISK FACTORS AND RISK MANAGEMENT
The oilfield services industry involves many risks, which may influence the ultimate success of the Company. The risks and uncertainties set out are not the only ones the Company is facing. There are additional risks and uncertainties that the Company does not currently know about or that the Company currently considers immaterial which may also impair the Company’s business operations and can cause the price of the Common Shares to decline. If any of the following risks occur, the Company’s business may be harmed and the Company’s financial condition and results of operations may suffer significantly:
- The Company's business depends on the oil and natural gas industry and particularly on the level of exploration, development and production for North American oil and natural gas, which is volatile;
- Difficulty in retaining, replacing or adding personnel could adversely affect the Company's business;
- If the Company is unable to obtain raw materials, diesel fuel and component parts from its current suppliers or obtain them at competitive prices, it could have a material adverse effect on the Company's business;
- STEP's reliance on equipment suppliers and fabricators exposes it to risks including timing of delivery and quality of equipment;
- Radical activism could harm the Company's business;
- Natural disasters and pandemics (including COVID-19) could adversely affect the Company;
- The Company's industry is affected by excess equipment levels;
- The Company's industry is intensely competitive;
- The Company's current technology may become obsolete or experience a decrease in demand;
- Cyber-attacks and loss of the Company's information and computer systems could adversely affect the Company's business;
- The Company's client base is concentrated and loss of a significant client could cause its revenue to decline substantially.
- Fluctuations in currency exchange rates could adversely affect the Company's business;
- Legislation, regulations, and court rulings could result in increased costs and additional operating restrictions or delays;
- The Company is subject to a number of health, safety and environmental laws and regulations that may require it to make substantial expenditures or cause it to incur substantial liabilities;
- Political and social events and decisions could have an adverse effect on the Company;
- The Company is susceptible to seasonal volatility in its operating and financial results due to adverse weather conditions.
- The Company may be exposed to third-party credit risk;
- The Company's operations are subject to hazards inherent in the oilfield services industry, which risks may not be covered to the full extent by the Company's insurance policies;
- Failure to maintain the Company's safety standards and record could lead to a decline in the demand for services.
- Access to capital may become restricted, more expensive, or repayment could be required;
- Actual results may differ materially from management estimates and assumptions;
- The Company may become subject to legal proceedings which could have a material adverse effect on its business, financial condition and results of operations;
- The direct and indirect costs of various GHG regulations, existing and proposed, may adversely affect the Company's business, operations and financial results;
- The Company's internal controls may not be sufficient to ensure the Company maintains control over its financial processes and reporting;
- Business acquisitions involve numerous risks and the failure to realize anticipated benefits of acquisitions and dispositions could negatively affect the Company's results of operations;
- There can be no assurance that the steps the Company takes to protect its intellectual property rights will prevent misappropriation or infringement;
- Improper access to confidential information could adversely affect the Company's business; and
- Some of the Company's directors and officers have conflicts of interest as a result of their involvement with other oilfield services companies.
In addition, global and national risks associated with inflation or economic contraction may adversely affect the Company by, among other things, reducing economic activity resulting in lower demand, and pricing, for crude oil and natural gas products, and thereby the demand and pricing for the Company’s services. For additional information regarding the risks that the Company is exposed to, see the disclosure provided under the heading “Risk Factors” in the AIF which is available on the SEDAR website at www.sedar.com and is incorporated by reference herein.
FORWARD-LOOKING INFORMATION & STATEMENTS
Certain statements contained in this Press Release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”). These statements relate to the expectations of management about future events, results of operations and the Company’s future performance (both operational and financial) and business prospects. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “contemplate”, “continue”, “estimate”, “expect”, “intend”, “propose”, “might”, “may”, “will”, “shall”, “project”, “should”, “could”, “would”, “believe”, “predict”, “forecast”, “pursue”, “potential”, “objective” and “capable” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. While the Company believes the expectations reflected in the forward-looking statements included in this Press Release are reasonable, such statements are not guarantees of future performance or outcomes and may prove to be incorrect and should not be unduly relied upon.
In particular, but without limitation, this Press Release contains forward-looking statements pertaining to: 2023, 2024, and 2025 industry conditions and outlook, including the effect of European and
The forward-looking information and statements contained in this Press Release reflect several material factors and expectations and assumptions of the Company including, without limitation: the effect of macroeconomic factors, including global energy security concerns and levels of oil and gas inventories; market concerns regarding economic recession; levels of oil and gas production and the effect of
Actual results could differ materially from those anticipated in these forward‐looking statements due to the risk factors set forth under the heading “Risk Factors” in the AIF and under the heading Risk Factors and Risk Management in this Press Release.
Any financial outlook or future orientated financial information contained in this Press Release regarding prospective financial performance, financial position or cash flows is based on the assumptions about future events, including economic conditions and proposed courses of action based on management’s assessment of the relevant information that is currently available. Projected operational information, including the Company’s capital program, contains forward looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of the Company’s operations will likely vary from the amounts set forth in these projections and such variations may be material. Readers are cautioned that any such financial outlook and future oriented financial information contains herein should not be used for purposes other than those for which it is disclosed herein.
The forward-looking information and statements contained in this Press Release speak only as of the date of the document, and none of the Company or its subsidiaries assumes any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws. The reader is cautioned not to place undue reliance on forward-looking information.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
As at | |||||||
Unaudited (in thousands of Canadian dollars) | 2023 | 2022 | |||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 1,486 | $ | 2,785 | |||
Trade and other receivables | 169,313 | 199,004 | |||||
Income tax receivable | - | 137 | |||||
Inventory | 51,619 | 46,410 | |||||
Prepaid expenses and deposits | 11,068 | 8,025 | |||||
Risk management contracts | 413 | - | |||||
233,899 | 256,361 | ||||||
Property and equipment | 404,819 | 402,482 | |||||
Right-of-use assets | 27,227 | 23,528 | |||||
Intangible assets | 132 | 161 | |||||
Other assets | 4,172 | - | |||||
$ | 670,249 | $ | 682,532 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current Liabilities | |||||||
Trade and other payables | $ | 137,973 | $ | 165,869 | |||
Current portion of lease obligations | 8,302 | 8,326 | |||||
Current portion of other liabilities | 2,654 | 6,526 | |||||
Income tax payable | 12,527 | 9,060 | |||||
161,456 | 189,781 | ||||||
Deferred tax liabilities | 18,348 | 17,972 | |||||
Lease obligations | 18,461 | 13,860 | |||||
Other liabilities | 16,472 | 14,092 | |||||
Loans and borrowings | 89,740 | 140,794 | |||||
304,477 | 376,499 | ||||||
Shareholders' equity | |||||||
Share capital | 455,864 | 453,702 | |||||
Contributed surplus | 34,701 | 32,843 | |||||
Accumulated other comprehensive income | 16,292 | 16,236 | |||||
Deficit | (141,085 | ) | (196,748 | ) | |||
365,772 | 306,033 | ||||||
$ | 670,249 | $ | 682,532 |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF NET INCOME AND OTHER COMPREHENSIVE INCOME
For the three months ended | For the nine months ended | ||||||||||||
Unaudited (in thousands of Canadian dollars, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||
Revenue | $ | 255,235 | $ | 245,085 | $ | 750,676 | $ | 737,624 | |||||
Operating expenses | 214,218 | 198,770 | 639,293 | 623,622 | |||||||||
Gross profit | 41,017 | 46,315 | 111,383 | 114,002 | |||||||||
Selling, general and administrative expenses | 13,409 | 9,007 | 29,132 | 43,148 | |||||||||
Results from operating activities | 27,608 | 37,308 | 82,251 | 70,854 | |||||||||
Finance costs, net | 2,850 | 1,330 | 8,557 | 7,551 | |||||||||
Foreign exchange loss (gain) | 1,278 | (173 | ) | 2,036 | (224 | ) | |||||||
Unrealized gain on derivatives | (3,783 | ) | - | (1,289 | ) | - | |||||||
Gain on disposal of property and equipment | (417 | ) | (921 | ) | (1,064 | ) | (2,571 | ) | |||||
Amortization of intangible assets | 10 | 9 | 30 | 135 | |||||||||
Impairment reversal of property and equipment | - | - | - | (32,708 | ) | ||||||||
Income before income tax | 27,670 | 37,063 | 73,981 | 98,671 | |||||||||
Income tax expense | |||||||||||||
Current | 4,878 | 5,071 | 17,948 | 8,423 | |||||||||
Deferred | 2,058 | 1,140 | 370 | 12,159 | |||||||||
Total income tax expense | 6,936 | 6,211 | 18,318 | 20,582 | |||||||||
Net income | 20,734 | 30,852 | 55,663 | 78,089 | |||||||||
Other comprehensive income | |||||||||||||
Foreign currency translation gain | 6,039 | 13,956 | 56 | 17,092 | |||||||||
Total comprehensive income | $ | 26,773 | $ | 44,808 | $ | 55,719 | $ | 95,181 | |||||
Net income per share: | |||||||||||||
Basic | $ | 0.29 | $ | 0.45 | $ | 0.77 | $ | 1.14 | |||||
Diluted | $ | 0.28 | $ | 0.43 | $ | 0.74 | $ | 1.09 |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
For the three months ended | For the nine months ended | ||||||||||||
Unaudited (in thousands of Canadian dollars) | 2023 | 2022 | 2023 | 2022 | |||||||||
Operating activities: | |||||||||||||
Net income | $ | 20,734 | $ | 30,852 | $ | 55,663 | $ | 78,089 | |||||
Adjusted for the following: | |||||||||||||
Depreciation and amortization | 20,743 | 19,378 | 62,614 | 63,140 | |||||||||
Share-based compensation | 4,045 | 1,373 | 307 | 16,431 | |||||||||
Unrealized foreign exchange loss (gain) | 1,041 | (837 | ) | 3,413 | (812 | ) | |||||||
Unrealized gain on derivatives | (3,783 | ) | - | (1,289 | ) | - | |||||||
Gain on disposal of property and equipment | (417 | ) | (921 | ) | (1,064 | ) | (2,571 | ) | |||||
Impairment reversal of property and equipment | - | - | - | (32,708 | ) | ||||||||
Finance costs | 2,850 | 1,330 | 8,557 | 7,551 | |||||||||
Income tax expense | 6,936 | 6,211 | 18,318 | 20,582 | |||||||||
Income taxes paid | (1,569 | ) | (117 | ) | (14,439 | ) | (161 | ) | |||||
Cash finance costs paid | (2,451 | ) | (3,616 | ) | (8,523 | ) | (9,030 | ) | |||||
Changes in non-cash working capital from operating activities | 2,607 | 19,395 | 8,319 | (50,246 | ) | ||||||||
Net cash provided by operating activities | 50,736 | 73,048 | 131,876 | 90,265 | |||||||||
Investing activities: | |||||||||||||
Purchase of property and equipment | (25,232 | ) | (20,226 | ) | (65,606 | ) | (50,322 | ) | |||||
Proceeds from disposal of equipment and vehicles | 75 | 888 | 2,023 | 5,658 | |||||||||
Changes in non-cash working capital from investing activities | 2,613 | (5,821 | ) | (9,986 | ) | 103 | |||||||
Net cash used in investing activities | (22,544 | ) | (25,159 | ) | (73,569 | ) | (44,561 | ) | |||||
Financing activities: | |||||||||||||
(Repayment) draws of loans and borrowings | (30,236 | ) | (46,046 | ) | (53,302 | ) | (41,012 | ) | |||||
Repayment of obligations under finance lease | (2,210 | ) | (3,179 | ) | (6,414 | ) | (7,585 | ) | |||||
Net cash used in financing activities | (32,446 | ) | (49,225 | ) | (59,716 | ) | (48,597 | ) | |||||
Impact of exchange rate changes on cash and cash equivalents | 32 | 914 | 110 | 951 | |||||||||
Decrease in cash and cash equivalents | (4,222 | ) | (422 | ) | (1,299 | ) | (1,942 | ) | |||||
Cash and cash equivalents, beginning of period | 5,708 | 2,178 | 2,785 | 3,698 | |||||||||
Cash and cash equivalents, end of period | $ | 1,486 | $ | 1,756 | $ | 1,486 | $ | 1,756 |
ABOUT STEP
STEP is an energy services company that provides coiled tubing, fluid and nitrogen pumping and hydraulic fracturing solutions. Our combination of modern equipment along with our commitment to safety and quality execution has differentiated STEP in plays where wells are deeper, have longer laterals and higher pressures. STEP has a high-performance, safety-focused culture and its experienced technical office and field professionals are committed to providing innovative, reliable and cost-effective solutions to its clients.
Founded in 2011 as a specialized deep capacity coiled tubing company, STEP has grown into a North American service provider delivering completion and stimulation services to exploration and production (“E&P”) companies in
Our four core values; Safety, Trust, Execution and Possibilities inspire our team of professionals to provide differentiated levels of service, with a goal of flawless execution and an unwavering focus on safety.
For more information please contact:
President and Chief Executive Officer | Chief Financial Officer | |||
Telephone: 403-457-1772 | Telephone: 403-457-1772 | |||
Email: investor_relations@step-es.com Web: www.stepenergyservices.com | ||||
STEP will host a conference call on
To listen to the webcast of the conference call, please click on the following URL:
https://viavid.webcasts.com/starthere.jsp?ei=1634848&tp_key=e301297c60.
You can also visit the Investors section of our website at www.stepenergyservices.com and click on “Reports, Presentations & Key Dates”.
To participate in the Q&A session, please call the conference call operator at: 1-888-886-7786 (toll free) 15 minutes prior to the call’s start time and ask for “STEP Energy Services Third Quarter 2023 Earnings Results Conference Call”.
The conference call will be archived on STEP’s website at www.stepenergyservices.com/investors.
Source:
2023 GlobeNewswire, Inc., source